While the Covid-19 pandemic and corresponding economic crisis have made 2020 a devastating year for the vast majority of people throughout the United States, most of the country's biggest companies have prospered—only to hand a larger chunk of profits to shareholders while firing thousands of workers.
"The choices that they make are governed by, essentially, maximizing shareholder value."
—Gary Walker, former employee at Salesforce
An in-depth investigation published Wednesday by the Washington Post illuminates how "big businesses are having a very different year from most of the country," which is suffering as a result of the federal government's negligent response to the ongoing public health catastrophe and inadequate provision of financial assistance to working-class households.
"This is a global crisis but the big companies are not treating it as one—they haven't skipped a beat," said William Lazonick, an emeritus economics professor at the University of Massachusetts at Lowell.
The Post shared examples of the "surprisingly upbeat" outlook shared by executives at some of America's largest corporations: "I don't think we've ever been more excited or energized about our prospects," PayPal finance chief John Rainey said on a November conference call. "These are times when the strong can get stronger," Nike chief John Donahoe told analysts in September.
According to the newspaper's analysis, 45 of the 50 most highly valued U.S. companies have "turned a profit" in 2020. Despite their financial success, 27 of those firms cut staff this year, laying off more than 100,000 workers in the midst of an intertwined health and economic emergency.
Instead of using the wealth produced by workers to keep employees on payroll, corporations "put Americans out of work and used their profits to increase the wealth of shareholders," the Post found.
At the outset of the coronavirus crisis, the Post reported, a handful of corporate executives who "appeared eager to make good" on a pledge made last year "to focus less on shareholders and more on the well-being of their employees and broader communities... suspended payments to investors and vowed not to hold layoffs." But then several "big firms that were profitable during the pandemic laid off workers anyway."
"Companies sent thousands of employees packing while sending billions of dollars to shareholders," the Post noted. "Walmart, whose CEO spent the past year championing the idea that businesses 'should not just serve shareholders,' nonetheless distributed more than $10 billion to its investors during the pandemic while laying off 1,200 corporate office employees."
As Public Citizen pointed out on social media, Walmart was not alone:
Pandemic layoffs:— Public Citizen (@Public_Citizen) December 16, 2020
B. Hathaway: 13,300 workers
Cisco: 8,000 workers
Comcast: 3,500 workers
AT&T: 3,400 workers
Citigroup: 2,000 workers
Oracle: 1,300 workers
Walmart: 1,240 workers
Salesforce: 1,000 workers
All of these companies have turned a profit during the pandemic.
Some companies "kept their promises not to lay off staff," but others "cut staff even after their chief executives vowed not to do so," the Post reported.
At the onset of the pandemic, Chuck Robbins described the need to keep workers employed as a moral imperative. The chief executive of Cisco, a $180 billion software and networking giant, said large companies like his shouldn't lay off workers during a global crisis because, even in a bad year, they had the resources to maintain payrolls.
"Why would we contribute to the problem?" Robbins asked in an interview with Bloomberg News published in April. "To me, it's just silly for those of us who have the financial wherewithal to absorb this, for us to add to the problem."
Four months later, Cisco began implementing a plan to lay off thousands of employees.
"The majority of Americans who lost jobs this year were laid off from small businesses, many of which had no option but to cut workers to stave off financial collapse," the Post noted. "But larger companies actually laid off a greater portion of their workforces over that period—9 percent for large firms vs. 7 percent for smaller firms—despite having more resources to survive the downturn."
Speaking of well-heeled corporate giants, Lazonick pointed out that "Apple gave back tens of billions of dollars to shareholders."
"It's sick," he added. According to the Post, "Apple spent $41 billion buying shares and paying cash dividends between April and September, more than twice as much as the company with the next highest total, Microsoft."
Salesforce CEO Marc Benioff, a signatory to the Business Roundtable's 2019 statement on corporate purpose and a proponent of so-called stakeholder capitalism, is one of the executives who continued to prioritize the interests of shareholders in 2020—laying off 1,000 workers despite a 28% increase in revenue compared to last year—even after promising not to do so during the pandemic's early stages.
Benioff, whom the Post called "the self-styled leader of the corporate philanthropy movement," in March urged his fellow CEOs to join his "90 day pledge" to not lay off workers for three months, even encouraging "Salesforce employees to keep supporting hourly workers, such as housekeepers and dog walkers, who do work for them."
"Making good on that pledge was not hard for Salesforce, a company sitting on more than $9 billion in cash and short-term investments," the Post added. "It generated $2.7 billion in profit during the first six months of the pandemic, as businesses flocked to Salesforce's tools for helping them manage operations remotely."
Layoffs at the company occurred five months after Benioff's pledge and "were announced one day after the software giant announced its biggest quarter of profit and revenue in history, sending its stock soaring 30 percent," the Post reported. A Salesforce spokesperson said "the company did make good on his promise not to hold layoffs within 90 days of his tweet."
As the Post reported, "Current and former employees at some of these companies say they weren't surprised to see their leaders renege on promises to retain staff through the pandemic. They didn't put too much faith in those promises in the first place."
Gary Walker, a systems engineer who was one of 1,000 employees Salesforce laid off in late August, told the newspaper that "the choices that they make are governed by, essentially, maximizing shareholder value."
In contrast to the empty promises made by those like Benioff, Dan Price—the Seattle-based CEO of Gravity Payments famous for cutting his annual pay by one million dollars so all workers at his company could make at least $70,000 per year—seems to have figured out a way to put working people above profit margins.
Price tweeted that he didn't fire anyone—instead providing small raises—despite having a down year.
Our company revenue is down 1% this year, the first time in 17 years we didn't grow— Dan Price (@DanPriceSeattle) December 10, 2020
We choose to do 0 layoffs & gave small raises, crushing our profit
As CEO I'd be fired for this at a big company that requires nonstop growth. But with no investors we can treat employees first.
Price acknowledged that he would "be fired for this at a big company that requires nonstop growth."
"But with no investors," he added, "we can treat employees first."